Homeowner warranties on existing or resale of older homes are insurance policies that can be paid for by the seller or buyer and will cover the new home owner for unexpected repairs to certain mechanical and, sometimes, structural repairs. As a buyer, it is a smart idea to discuss what company will provide your coverage. They are not all the same. Further, it is possible to specify which company you want when writing or negotiating your contract for purchase of the new home. Examples of companies that provide these types of coverage are Old Republic Home Warranty and American Home Shield.
A home warranty pays repair or replacement costs for the mechanical systems and built-in appliances that break down in a home. The price of the warranty is typically collected at closing and can be included in either the buyer or seller's closing costs. It usually goes into effect at closing. The coverage period is normally one year. There are a lot of companies offering home warranties and coverage of individual policies can vary widely. Usually, central heating and air conditioning systems, electrical, plumbing and major appliances are covered. It's important that you read the policy closely and understand what is and is not covered. The cost for a one year home warranty typically runs between $300 and $600, depending on the size of the home and the specific types of coverage. There is normally a deductible of $50 - $75 to pay when making a repair claim.
There are some very good reasons to pay for a home warranty when selling your home. Providing a warranty can help set your home apart from the competition. Buyers will appreciate having a warranty and will feel more comfortable about buying your home without worrying about hidden problems down the road. Providing a warranty can even result in a higher price, offsetting the cost. Certainly it can make it easier for a buyer to make an offer. These assets make the home warranty an excellent marketing tool.
In addition to marketing advantages, you could also avoid getting sued down the road. When a major appliance, heating or air conditioning system goes bad shortly after a home is sold, it's not uncommon for the buyer to blame the seller. Unfortunately, this can and does lead to lawsuits. Providing a home warranty with the sale of your home can go a long way towards preventing these types of suits. In some areas where lawsuits are particularly common, almost all homes are sold with a home warranty included.
If you are buying a home and it doesn't come with a warranty, you may want to consider paying for one yourself. The first year after buying a home is a time when most people don't have a lot of cash on hand to cover problems that might arise. Having a one year home warranty in place can provide peace of mind during this time and if something does break down, could really save your budget.
Another type of warranty that is included in the purchase of a new home is a builder home warranty. In Alachua County and throughout the State of Florida, it is law that the builder of a new home provide a one year home warranty that covers the home from normal conditions found in a new home. Some builders will provide additional coverage in the form of 10 year structural warranties and others will subcontract out their warranty repair work to companies that will provide the service down the road should you need it.
I have worked with many new home owners in Gainesville who either custom built their new homes or bought a new home that had already been completed. Not all builders, just like all warranties, are not the same. It pays to have someone who is experienced representing you in the process. Make sure your builder knows you are working with a Realtor.